EDSR INFORMATION #2 07-13-1998 -\(
INFORriON
0111! of ' y" •
Elk\ � •
River
June 24, 1998
Mr. Peter Scherer
9110 - 83rd Avenue North
Brooklyn Park, Minnesota 55445
Dear Mr. Scherer:
Subject: Letter of Monday, May 18, 1998
This is in response to your letter which was presented by Jack Sheedy to the
Elk River City Council at its meeting on Monday, May 18, 1998.
• I would like to take this opportunity to respond to the following issues which
you addressed in your letter:
1. TIF Assistance - Jack Sheedy did approach me at the time of
your conversation with Jo Ann Fabrics regarding TIF assistance
to complete renovations to the mall space. I indicated that TIF
was not available for this activity, and that continues to be the
case. Other communities are possibly using TIF funds for these
types of activities, however, there are hundreds of variables to
the tax increment law which allows older districts to fund a
variety of activities at the discretion of the city. Elk River's tax
increment districts, to which these types of laws apply, have
been decertified, leaving no funds available for discretionary
development activities such as a grant or loan to rehab existing
space for office/retail use.
Due, in part, to the time which has passed since my last
conversation with Mr. Sheedy about Jo Ann Fabrics, I would be
more inclined to recommend that the Economic Development
Authority provide some type of loan assistance to a project to aid
in the rehabilitation or renovation of space for a potential
• tenant. In past conversations with Mr. Sheedy, however, debt
financing was not a very interesting alternative.
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD & Phone: (612) 441-7420 • Fax: (612) 441-7425
•
ELK RIVER CITY COUNCIL CO Py
13065 Orono Parkway
Elk River, MN 55330
Council Members:
A conflict in my schedule precludes my attending the 5:00 P.M. meeting Monday May 18, 1998
to discuss the Elk River Mall. Please accept these written thoughts and the presence of Jack
Sheedy and Larry Leitschuh in my absence.
USES
During 1988 and 1989 there were several meetings between representatives of the mall ownership
and representatives of the Elk River Administration. The meetings were culminated at the City
Council Meeting of October 16, 1989 when the Council considered a motion to amend the PUD
Agreement to allow business and professional offices at the Elk River Mall. The Amendment was
to allow not to exceed 10,000 square feet for a four year period" with all restrictions lifted after
four years. The motion passed 4 - 0.
• Subsequently a chiropractic office,an insurance office,a tax office, a dance studio and a tailor shop
have leased space at the mall as a result of this amendment. We have presented leasing
opportunities to numerous business and office users, but we have not been successful with all our
proposals.
MARKETING
Our Company has retained a Real Estate Management and Leasing Company (Jack Sheedy&
Associates, Inc.)with representatives having over 60 years of real estate experience. Since Hagen
vacated the County Market space, the Company has made contacts with the following
organizations and businesses concerning the leasing of space:
Burlington Coat Factory Cherokee Equipment
Burlington, New Jersey % Rademacher Companies
Best Buy Company Rick Wondra of Wayzata Boat Works
Eden Prairie, MN Rick Foster
Health Club
Astrup Drug
Austin, MN Kohl's Department Store
Menomonee Falls, Wisconsin
• Circuit City Stores, Inc.
Richmond, Virginia Frank's Nursery
Detroit, Michigan
• Professional Kanste Snyder Drug
Homeplace, Inc. Paper Warehouse
LifeTime Fitness
During this period we were very close to a deal the JoAnn Fabrics, but their requirements for
improvements to the County Market space combined with the rent that they were willing to pay,
made the lease proposals unacceptable to both parties. At that time Mr. Sheedy approached the
Economic Development Department of the City and requested TIF assistance for the store
conversion to rentable space. Mr. Sheedy was told this was not possible for this kind of activity,
even though we knew other communities were using these funds. We were also told it would be
"unfair" competition to local retailers. The deal went away!
CITIZENSHIP
When we built this mall in the mid eighties, we were required by the administration then in place
to orient the mall away from the highway. We all know that that was a mistake and future retail
developers were not required to do the same. Yet, we have remained good stewards to the
community of Elk River. We have maintained our property in first class fashion, when most
• would have deferred maintenance to save money. We have only rented to tenants that provide a
contribution to the community, not sleazy operators or non-family oriented businesses. We have
abided by all our agreements with the City, the banks and our tenants. In short, we have been
good solid citizens to the Elk River community, without any financial return.
Our lease proposals have been at below market lease rates ($4.50 to $6.50 net). We have even
overlooked,in several cases, the financial credibility of the prospects and have been burned in our
efforts to add tenants to the mall. And during this period we have not been collecting rent for the
County Market space and are presently not collecting rent on the Pamida space. I am
disappointed by the notion that we have not tried to succeed. Rather we have gone above and
beyond to maintain and enhance a property disadvantaged from its beginning. We have also tried
to do this only once asking for T.I.F. assistance.
CONCERNS
We have recently completed long and complicated negotiations with the purchasers of the GTI
theaters. Once again, we have done what is in the best interest of the community and tried to limit
our losses along the way. Next we must move forward on strengthening the North half of the
mall. We need support and understanding from the Community of Elk River, not new barriers
erected and uninformed second guessing as to our efforts to stem the ongoing losses.
I am concerned about rumors that other potential retail developers may be receiving government
• aid on new projects while we continue to struggle to fill our space at below market rates. If
these rumors are true, they provide the unfair competition mentioned above. We, the pioneers in
the Elk River Mall business, could use some type of assistance to leverage our ongoing